Black Friday: Targeting the "Wow" Factor

Can Target out-wow its rivals?

Those of us who follow retail are dying to know what some companies' plans are to make this holiday season -- one that's expected to be a challenging one at best, given concerns about consumer spending -- a success. Last week, I spoke to a spokeswoman for Target (NYSE:TGT) to find out what the cheap-chic retailer has in store for customers.

Lena Michaud, senior manager of communications for Target, fleshed out some of the retailer's holiday cheer. Of course, it plans to stick to its "brand promise," which is providing differentiated merchandise year round (always expected from Target). It's also got a ton of gift cards, both holiday-oriented and general; I liked the line of limited-edition gift cards with clever touches, such as one that doubles as a flashlight and another that's also a box of crayons.

When it comes to drumming up extra excitement, the company's also got an addition for the gift-giving season, dubbed "WOW or never."

It's WOW or never"WOW or never" is a limited-time sweepstakes through which 20 specific products purchased with customers' Target "REDcard" credit cards automatically enter the purchasers into a sweepstakes to win some aspirational prizes. The sweepstakes starts Nov. 25 and ends Dec. 1. For example, buy an Isaac Mizrahi trench coat, and you're entered to win a New York designer experience with Mizrahi and Sonia Kashuk. Or pick up a copy of Tony Hawk's Proving Ground limited edition video game, and you could win a trip for two to Los Angeles to meet Tony Hawk at Activision's (NASDAQ:ATVI) Neversoft Studios, where you also become an avatar in the next Tony Hawk game. The purchase of the four-doll collector's set for Disney's (NYSE:DIS) wildly successful High School Musical 2 brings the possibility of a trip to the premiere of High School Musical 3.

To my way of thinking, though, some of the products and prizes seem to have a little more "wow" than others. For example, one of the featured products is Sony's (NYSE:SNE) MP3 video player -- I mean, Apple's (NASDAQ:AAPL) iPod has been the real "wow" product for quite a few holiday seasons running. And I can't help but take a bit of a potshot at the prize that centers around guitar lessons with a member of Def Leppard, which, personally, just reminds me of being 13, when Pyromania came out; I'd say that's a strangely niche prize, although the band has certainly been prime fodder for VH-1's Behind the Music.

Whether you consider the sweepstakes Christmas-y or corny, maybe Target doesn't really have to provide too much additional "wow" for its customer base in the first place. Although Michaud acknowledged that there will be some discounts on products for limited times, it doesn't sound like any drastic, desperate preemptive price-cutting is planned, although Target will have its two-day sale on Black Friday and the following Saturday (with a 6 a.m. opening on Friday).

Tough times in tinseltown? There is, of course, an elephant in the room: Wal-Mart (NYSE:WMT), which threw down the gauntlet early with brutal price cuts well ahead of the traditional shopping season's advent. It was slashing prices in mid-October, and in what seemed like unprecedented early-bird zeal, it cut prices on popular toys around Oct. 1. (I understand Wal-Mart was one of the retailers that didn't respond to our requests to share its holiday plans with Foolish readers, unfortunately.)

Despite Wal-Mart's big, aggressive move, it looks like many retailers are going to play this game of chicken carefully. If Target doesn't sound like it's going to do a no-holds-barred bout of slashing, maybe it's not alone. (And Target said in its third-quarter conference call that it hasn't really noticed major changes from last year, despite investors' concern about a consumer slowdown.) Given concerns about consumer strength, tight inventory control is a list that retailers are checking twice this year. It's one thing to make strategic price cuts to increase customer traffic, but it's quite another to slash prices to move merchandise.

Investors have two ways to look at Target's holiday initiatives -- to suspect Target is just not trying hard enough this pivotal year, or to suspect it's a retailer that actually doesn't have to. I'm leaning toward the latter. October was a recent bright spot for Target, as consumers reacted favorably to its Halloween merchandise.

Like Costco (NASDAQ:COST), Target provides cool merchandise at reasonable prices that a higher income demographic finds appealing, and I'd imagine that even with a nervous consumer (maybe even because of that type of consumer, who's concerned but not in dire straits), it can excel this holiday season. We'll see what kind of "wow" Target delivers to investors after the holidays -- hopefully it won't be a "wow, it could have been better," but personally, I suspect Target will jingle all the way through the season.

Author

Alyce Lomax is a columnist for Fool.com specializing in environmental, social, and governance (ESG) issues and an analyst for Motley Fool One. From October 2010 through June 2015, she managed the real-money Prosocial Portfolio, which integrated socially responsible investing factors into stock analysis. Follow @AlyceLomax